STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - September 24, 2008)
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By Mr. SMITH (for himself and Mr. Lieberman):
S. 3554. A bill to provide employees of small employers with access to quality, affordable health insurance coverage; to the Committee on Finance.
Mr. SMITH. Mr. President, today I introduce the Affordable Coverage for Small Employers Act of 2008, with my colleague, Senator Joseph Lieberman. This legislation would tackle one of the nation's most pressing domestic challenges, ensuring all Americans have access to affordable, high quality health care. While the Affordable Coverage for Small Employers Act may not be the panacea to all of our Nation's healthcare woes, I believe it is a reasonable first step along the path of reform and it represents a viable solution to cover the uninsured.
In my view, that solution begins with helping small employers gain access to affordable, high quality health insurance. Over half of the Nation's uninsured has a connection to a business that employs fewer than 100 employees. By extending access to affordable health coverage to those individuals through their employers, we can make significant progress in reducing the number of Americans who do not have health insurance.
Broadly, the Affordable Coverage for Small Employers Act incentivizes reform of the existing small group market so employers have access to affordable coverage options to meet their particular needs. It provides national direction to ensure consistency across the entire system, but relies upon the existing infrastructure forged by the States and the private market to ultimately provide new coverage options for small employers. Additionally, it provides graduated, income-sensitive subsidies through tax credits to low-income individuals to help offset the cost of their health coverage. It also provides graduated tax credits to small employers who contribute at least 50 percent toward the cost of their employees' premiums to encourage them to purchase coverage through new, regional purchasing exchanges.
One of the key principles of the proposal is regional cooperation. The existing system of state-based regulation of the small group market has resulted in a great deal of inefficiency in the marketing and selling of health coverage products. One of the key elements of reform from the Federal perspective should be encouraging regional cooperation--and consistency of regulation--across State lines. The Affordable Coverage for Small Employers Act accounts for this by apportioning States with similar existing insurance regulations into new ``Health Coverage Exchange Regions.'' Each of these regions will be charged with developing a common set of rating guidelines so that all insurance products sold in the health coverage exchange are regulated by the same set of rules. Over time, such common regulatory policies will have the effect of stabilizing the small group market, and generating efficiencies that could lead to longterm stabilization of premium cost increases.
A stakeholder board will govern each Health Coverage Exchange Region and must include at a minimum representation from the insurance commissioners from all member States. That way, States will be the driving force in determining how to harmonize existing rating guidelines to improve stability in the small group market. Each Regional Board will have the flexibility to develop its own common rating guidelines, in addition to allowing other hard-to-cover groups, like sole proprietors and individuals, to participate in programs sponsored by the Health Coverage Exchange Region.
While adoption of the common rating guidelines is voluntary, the Affordable Coverage for Small Employers Act provides States with generous incentives to do so. First, small employers in a given State will be unable to purchase health coverage through its region's Health Coverage Exchange unless their State has adopted the common guidelines. Additionally, small employers and employees only will have access to the Federal subsidies once the guidelines are adopted. Change can be difficult, especially in regard to reform of current regulatory structures. The bill recognizes this fact by allowing States a strong voice in developing the common rating guidelines, as well as additional flexibility to implement such guidelines in special cases where they differ significantly from existing policy.
Another key issue the Affordable Coverage for Small Employers Act addresses is that of ensuring small employers, regardless of their location, has access to a comprehensive health benefit package. We should not expect our small employers to settle for coverage that is far less comprehensive than what a majority of Americans have access to. Congress can and should do better on this front, and the proposal does. All small employers will have access to a standard benefit package that mirrors the benefits available to Members of Congress and other Federal employees. Over time, this benefit package will be updated to ensure that covered services reflect advances in medical science and are supported by sound, evidence-based research.
While the Affordable Coverage for Small Employers Act leaves most responsibility for day-to-day operations of the Health Coverage Exchange to state-based regional boards, it recognizes the need for uniformity across the entire system by creating a National Health Coverage Policy Board comprised of key stakeholders representing the health care field. This Executive-appointed, independent body will apportion States into Health Coverage Exchange Regions and set broad policy guidelines for the overall system. While I firmly believe the reforms needed to improve access in the small group market should occur at the State level, there needs to be a national presence in the overall effort to ensure health care quality, greater regulatory consistency and maximize administrative efficiencies.
I also would like to comment on the subsidies available in the legislation. Researchers and policymakers alike are well aware that there are some working Americans who simply will be unable to afford the cost of health insurance no matter how inexpensive it might be. The rhetoric surrounding the issue of the uninsured always includes reference to making health insurance more affordable and I fully support that intent. In the work Senator Lieberman and I have done on this issue, we have found that there are very few politically viable reform policies that would significantly reduce the cost of health coverage for small employers. We can implement initiatives to increase market efficiencies and provide employers with more coverage options, but those efforts still will not always make health coverage affordable for all Americans. In our proposal, allocating targeted, advanceable and refundable tax credits to those who need them is the Federal Government's primary responsibility.
To further encourage participation in the Exchange and to recognize the important role employers have in funding health benefits, the Affordable Coverage for Small Employers Act also includes advanceable, refundable tax credits for employers. Employers that contribute at least 50 percent of employees' premiums would be eligible for these tax credits to help offset the cost of their share of health coverage. I believe this approach will help employers who may be struggling to make ends meet and provide their employees the health coverage they need to stay healthy and productive.
It is essential that Congress act on this issue. We owe it to our small employers to ensure they have the same health benefit options available to them as larger employers, whose size and structure allow them to self-fund insurance coverage for their employees. The small business community is the backbone of the American economy, representing over 99 percent of all the Nation's businesses. But we often fail to recognize the essential role small businesses play in the economy. Each year, they provide approximately 75 percent of new jobs; account for over half of private sector output; and provide 40 percent of private sales. Small businesses represent the realization of the American dream. However, even with all their successes, there are many challenges that threaten their continued vitality.
In the unfurling healthcare reform debate, there is no shortage of innovative ideas. Aggressive proposals have been introduced on both sides of the aisle just this year. With over 46 million Americans uninsured and many more struggling with the cost of coverage, the time has come for Congress to seriously reform our health care system to ensure all Americans have access to care. Should support exist to pursue a comprehensive change, there are several proposals that hold a number of good ideas that combine the best of private and public section ingenuity. Recognizing that many people like receiving their health insurance through their employer; Congress may choose to pursue a more incremental approach--focusing first on fixing the part of the system that is not working--the small group market. For a reform debate to be successful, we need to bring all key stakeholders to the negotiating table, including employers. We share common problems, and we must work to develop common solutions.
As Congress continues its discussion of healthcare reform; I am hopeful that the concepts included in this proposal will be given full consideration as we begin to develop solutions to the difficult, long-standing problems in the health insurance market. I look forward to working with my colleagues on both sides of the aisle to craft policies that significantly expand small employers' access to quality health insurance coverage. This is the help they deserve, and this is the help that I know we can give them if we put our ideological differences aside and begin working together to make real progress on this issue.
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